Q: How has the Johannesburg Stock Exchange developed within the last 10 years?

A: The importance of and the trading volume on the JSE have grown dramatically over the last decade to reach monthly volume of about $6 billion and market capitalization of $800 billion. For comparison, 10 years ago the trading volume was only 10% of the current amount. Now the exchange in South Africa represents roughly 80% of the market capitalization of Africa, so it is the major African market.

Currently, a total of 1,103 securities including 390 listed companies trade on the exchange. The number of new listings has been steadily increasing from 8 IPOs in 2003 to 37 IPOs in 2006, so the interest towards the exchange continues to grow.

Q: What has been the main driver behind the new listings?

A: The growth of the economy in recent years has been creating a certain amount of wealth that is reflected on the stock exchange. We are actively looking for new companies that qualify for listings throughout the country, regardless whether they are large or small. Our active policy has been the main driver of the new listings.

In addition to the companies listed on the main board, we have also developed the Alternative Exchange, a market known as AltX, for quality small to medium companies. That market is now four years old and is very active.

The JSE has also operated a single stock futures market since 2001, which is now the largest such market in the world. 2001 was the year we acquired the business of SAFEX, or the South African Futures Exchange. The JSE retained the SAFEX branding.

Q: How is the local economy reflected on the exchange? What are the main industries listed?

A: The stock exchange in South Africa has existed since 1887, when the discovery of gold led to a boom in mining and finance, and respectively, to demand for a stock exchange. Although resources are still very important for the economy, South Africa also has well-developed energy, financial, communications, tourism, and services sectors.

In the last decade, the economic growth has helped to lower unemployment and to increase the investments. At the start of 2000, the restrictive labor laws were relaxed and privatization was undertaken.

Currently, construction is among the major industries on the stock exchange because there’s huge spending on construction in South Africa. But the stock exchange is well diversified in terms of industries as it includes also mining, consumer industries, etc. We have a resource-based economy, and as you are well aware, there is a resource boom around the world, which helps drive the exchange as well.

Q: What is your policy for attracting international investors?

A: We work with exchanges around the world to encourage dual listings of companies. Currently we have dual listings mainly with the London Stock Exchange and some with the Toronto Stock Exchange. I think that given the resource boom, it is only a matter of time before we attract more dual listings. There are a number of companies in Canada and Australia, which start to look at the possibility of being listed in South Africa.

We also do international road shows both in the U.S. and in Europe to popularize the South African market, and more importantly, we do our best to address the needs of investors, both foreign and local, for efficiency of trading, fast settlement, and transparency.

Q: What is the size of the brokerage community in South Africa? How is the market distributed between retail and institutional investors?

A: We have four different groups of members: 52 equity members, 119 equity derivative members, 83 agricultural product members, and 45 fixed interest members. There is a certain overlap between those groups as some people are members of all four sectors. The brokerage community has grown probably by about 30% over the last couple of years.

Our investor base is largely institutional, with about 80% of the activity in our markets undertaken by institutions. The participation on the retail level is very small and we are spending a lot of time on road shows to educate the general public about the opportunities the stock market presents.

Q: What is the reason for the low participation of retail investors, in your opinion?

A: There isn’t a large savings base to invest. Historically, South Africa has gone through tremendous inflation that has limited the savings. Only in the last say 5 to 10 years we managed to get inflation under control.

But probably 90% of the population is indirectly investing on the market through pension funds. We have a compulsory pension scheme and anyone who is employed in this country dedicates a certain amount of his or her salary for a pension. Most pensions get invested via the institutions into the markets.